Americans Want to Preserve Tax Incentives of Retirement Plans

A
strong majority of U.S. households—including those with and those without
retirement plan accounts—disagree with proposals to remove or reduce tax
incentives for retirement savers using defined contribution (DC) accounts, according
to new survey findings by the Investment Company Institute (ICI).

Eighty-eight
percent of households disagreed with the notion that the government should take
away the tax advantages of DC accounts, and 90% disagreed with reducing the
amount that individuals can contribute to DC accounts. These percentages are up
from 86% and 83%, respectively, one year ago.

Even
among households not owning DC accounts or individual retirement accounts
(IRAs), more than eight in 10 rejected the idea of taking away or reducing the
current tax treatment of DC accounts.

Eight
in 10 households with DC accounts said the tax treatment of their retirement
plans is a big incentive to contribute.

“Past
budget and tax reform initiatives have proposed to limit the benefits of tax
deferral on retirement plan contributions or cap the amount Americans can save
in their 401(k)s, individual retirement accounts, and pensions,” says ICI President
and CEO Paul Schott Stevens. “This ICI survey reaffirms our consistent finding
that Americans strongly support current tax incentives for retirement saving
and want those benefits to be preserved. All workers, regardless of income,
benefit from the current tax treatment for retirement plan saving, and we urge
policymakers, as they consider legislation in this area, not to curtail these
important incentives to save for retirement.”

Nine
in 10 DC account-owning households said they appreciate paycheck-by-paycheck
saving, and nearly all DC account-owning households agreed that choice in, and
control of, the investments in their retirement plan accounts is important. Among U.S.
households, whether they owned retirement accounts or not, most generally expressed
confidence in DC plans’ ability to help individuals meet their retirement
goals. Eight in 10 households owning DC accounts or IRAs indicated such
confidence. Even among households without a DC account or IRA, three in five
reported having this measure of confidence.